Methods and systems for utilizing intellectual property assets and rights

ABSTRACT

A method of utilizing an intellectual property grouping owned by a patent entity to generate income. The method includes acquiring rights in a first intellectual property asset from a seller on behalf of a patent investment entity, providing compensation to the seller in exchange for the first intellectual property asset, granting less than all of the rights in the first intellectual property asset to the seller of the intellectual property asset in exchange for a stream of payments, wherein granting less than all of the rights in the first intellectual property asset creates residual rights in the first intellectual property asset, and utilizing the residual rights in the first intellectual property asset to generate income for the patent investment entity.

CROSS-REFERENCE TO RELATED APPLICATIONS

The present application is a continuation-in-part of U.S. applicationSer. No. 10/718,041 filed on Nov. 18, 2003 and a continuation-in-part ofU.S. application Ser. No. 11/292,728 filed on Dec. 1, 2005, the entirecontents of each of which are incorporated by reference herein.

BACKGROUND

The present application relates to methods of securitizing and/ormonetizing assets to obtain benefits associated with the transaction. Inparticular, the present application relates to methods of creating apatent investment entity to facilitate the securitizing and/ormonetizing of intellectual property (IP) to obtain benefits associatedwith the securitizing and/or monetizing.

A securitization includes an assignable agreement having one or morespecified future payments backed by rights sufficient to assure theparties purchasing the security that the payments will be made or titleto property of similar value can be obtained. For example, in the caseof a mortgage, the property interest is title to real estate. In thecase of a sale/lease back, the property interest is the right ofeviction. In the case of the securitization of intellectual property(IP) assets, discussed in more detail below, the property interestobtained in the event that the future payments are not made is the rightto exclude others from the use of the subject matter of the IP. In eachcase, the party providing the capital has the ability to acquire aproperty interest that can be resold to others to provide a return ontheir original capital investment in the event that the specified futurepayments are not made according to the agreement.

Monetization may include the conversion of an asset or group of assetsinto some form of compensation, such as a lump sum payment, a stream ofpayments, etc. For example, licensing intellectual property in exchangefor a stream of licensing payments monetizes the patent.

In the practice of accounting, it is well established that IP is“intangible property” that has no intrinsic value per se, but is merelyrepresentative of the value of the discovery. As an incentive for R&Dexpenditures, R&D costs are fully deductible as an expense in the yearthe costs are incurred. Therefore, when R&D expenditures result in IPsuch as a patent, the “book value” of the patent is zero even though thevalue to the business may be large. However, during an acquisition of anentity that owns IP assets, it may be required that the IP asset receivea book value that is equivalent to the fair market value of the IPassets. Further, wherein the intellectual property is sold to anotherentity, the value received for that sale is recognized.

Some intellectual properties created as a consequence of R&D possessdesirable characteristics that lend themselves to securitization and/ormonetization. Patents are one such intellectual property. Patentsentitle the owner to exclude others from practicing the inventioncovered by the patent. Another type of intellectual property isinformation described in writings and knowledge arising within abusiness which is: (a) not generally known by others; (b) is retained insecret, and (c) is disclosed to others only under covenants to retainsuch disclosed intellectual properties secret between and among theparties bound by such covenants (hereinafter referred to as “tradesecrets” or “know how”). Copyrights are another form of IP that may besecuritized. Copyrights provide an author the right to controlreproduction of his intellectual creation, such as literary works,musical works, dramatic works, pictorial works, motion pictures, soundrecordings and architectural works.

A characteristic of intellectual property assets is the right tolicense, lease, or otherwise convey rights to use or otherwise practicethe useful art, in whole or in part, embodied in such intellectualproperties (hereinafter referred to as “licensing”). The granting ofthese rights to a third party is usually made in return for some type ofcompensation. A further characteristic of intellectual property assetsis the right to identify potential infringers of the intellectualproperty asset and to request or sue for payment of a reasonable ratebased on the infringing use.

What is needed is an entity configured to allow a corporation to obtainfavorable benefits based on the sale of an intellectual property assetto a patent investment entity and subsequent leasing of the intellectualproperty asset from the patent investment entity. What is further neededis a patent investment entity configured to generate income based uponresidual rights obtained in the acquisition and leasing of intellectualproperty assets.

SUMMARY

One exemplary embodiment relates to a method of utilizing anintellectual property grouping owned by a patent entity to generateincome. The method includes acquiring rights in a first intellectualproperty asset from a seller on behalf of a patent investment entity,providing compensation to the seller in exchange for the firstintellectual property asset, granting less than all of the rights in thefirst intellectual property asset to the seller of the intellectualproperty asset in exchange for a stream of payments, wherein grantingless than all of the rights in the first intellectual property assetcreates residual rights in the first intellectual property asset, andutilizing the residual rights in the first intellectual property assetto generate income for the patent investment entity.

Another exemplary embodiment relates to a method of utilizing anintellectual property grouping owned by a patent entity to generateincome. The method includes acquiring rights in a first and secondintellectual property asset from at least one seller on behalf of apatent investment entity, providing compensation to each of the at leastone seller in exchange for the first and second intellectual propertyassets, granting less than all of the rights in the first intellectualproperty asset to the sellers of the first and second intellectualproperty assets in exchange for a stream of payments, wherein grantingless than all of the rights in the first and second intellectualproperty asset creates first and second residual rights in the first andsecond intellectual property assets, respectively, and utilizing thefirst and second residual rights in the first and second intellectualproperty asset to generate income for the patent investment entity.

Yet another exemplary embodiment relates to a patent investment entityconfigured to manage an intellectual property grouping to generateincome. The patent investment entity includes an intellectual propertygrouping, including at least one residual right in a first intellectualproperty asset, the first intellectual property right created by a grantof less than all of the rights in the first intellectual property assetin exchange for a stream of payments. The patent investment entityfurther includes at least one equity interest in the patent investmententity, the interest configured to represent an interest in incomegenerated by the intellectual property grouping and an incomedistribution system, the system configured to distribute incomegenerated by the intellectual property grouping.

Yet another exemplary embodiment relates to a method of structuring atransaction to acquire an intellectual property asset including anintellectual property right. The method includes acquiring a firstportion of the intellectual property right from a seller in exchange forthe fair market value of the first portion, acquiring a second portionof the intellectual property right from a seller in exchange for anequity interest in a patent investment entity, leasing the first portionof the intellectual property right to the seller for a predefined leaseterm, and utilizing the second portion of the intellectual propertyright as a source of income for the patent investment entity.

Yet another exemplary embodiment relates to a method of structuring atransaction to acquire an intellectual property asset including anintellectual property right. The method includes acquiring a firstportion of the intellectual property right from a seller in exchange forthe fair market value of the first portion, acquiring a second portionof the intellectual property right from a seller in exchange for anequity interest in a patent investment entity, leasing the first portionof the intellectual property right to the seller for a predefined leaseterm, and utilizing the second portion of the intellectual propertyright in combination with at least one second portion from at least onesecond intellectual property asset as a source of income for the patentinvestment entity.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a block diagram illustrates a system and method for monetizingand/or securitizing intellectual property using a patent investmententity including acquired intellectual property assets according to anexemplary embodiment;

FIG. 2 is a block diagram illustrating a system and method formonetizing and/or securitizing intellectual property using a patentinvestment entity including acquired intellectual property assetsaccording to an alternative embodiment; and

FIG. 3 is a block diagram illustrating a system and method for groupingintellectual property rights according to an exemplary embodiment.

DETAILED DESCRIPTION OF SOME EMBODIMENTS

Referring now to FIG. 1, a block diagram 100 illustrates a system andmethod for monetizing and/or securitizing intellectual property using apatent investment entity including acquired intellectual property (“IP”)assets according to an exemplary embodiment. Block diagram 100 includesa patent investment entity 110 and a target entity 120 owning one ormore IP assets.

Target entity 120 may be any type of entity owning or owning rights inone or more IP assets. For example, target entity 120 may be acorporation, a partnership, an individual, etc.

The ownership of the one or more IP assets may be ownership based oncreation, for example where a person within target entity 120 creates aninvention and obtains a patent directed to the invention or creates anoriginal work and obtains a copyright. Alternatively, ownership may bethe result of an acquisition of an IP asset originally owned by anotherentity. Further, ownership may be based on an acquisition by licensingof an IP asset owned by another. Yet further, the ownership may beownership in whole or in part. Ownership of an IP asset can include anytype of ownership that confers the right to exercise one or more IPrights associated with the IP asset. Examples of IP assets may includepatents, copyrights, trade secrets, trademarks, etc.

IP rights can include any right associated with an IP asset. An IP rightmay be conferred by statute, case law, practice in the industry,inherent properties, etc. An IP right may further include the right toperform an action and/or prevent another party from performing anaction. For example, patents entitle the owner to exclude others fromimporting, making, using, selling, or offering to sell the inventioncovered by the patent. Further, copyrights provide an author the rightto control reproduction of his intellectual creation, such as literaryworks, musical works, dramatic works, pictorial works, motion pictures,sound recordings and architectural works, along with the right to makederivative works.

According to an exemplary embodiment, and based on the nature of IPrights, it is often possible to split an IP right into one or moreportions of the IP right. For example, as stated above, a patentgenerally includes a right to exclude others from practicing theinvention. Inherent in the right to exclude is the right to licenseparticular entities to practice the invention, usually in return forcompensation, such as licensing fees. Further, different type oflicenses may be granted such as an exclusive license, a non-exclusivelicense, an exclusive license within a defined field of use, etc.Whenever the license is other than an exclusive license to all fields ofuse for the entire economic life of the underlying IP asset, residualrights in the IP asset are created and licenses based on the residualrights may be granted to additional entities. Each portion of the IPright includes a right under the IP asset that is less than all of therights afforded by the “P asset.

Target entity 120 may be configured such that the entity is onlyutilizing a first portion of the IP rights afforded under an IP asset.For example, when a target entity 120 is a vehicle manufacturer and ownsa patent directed to a method of spray painting, the vehiclemanufacturer may only be utilizing the patented method of spray paintingas applied to vehicles. Accordingly, the first portion of the IP rightis a right to exclude others from using the method of spray painting tospray paint vehicles. The first portion may be either an exclusive or anon-exclusive right. The first portion may further be a right to use thesubject matter of the IP asset.

However, the patent right also includes at least a second portion of theIP right, which may include, continuing with the earlier example, themethod of spray painting as applied to houses. The at least secondportion may be referred to as a residual portion. The residual portionmay not be utilized by the vehicle manufacturer because they have nointerest in preventing others from using this method to spray painthouses. The IP right residual portions may include numerous residualportion delineated by field of use, term of use, geographic location ofuse, etc.

The residual portion of the IP right, although not valuable to thetarget entity 120 in its present business, may be valuable to anotherentity in a different business, such as house painting. Accordingly, thehouse painting entity may desire to license the residual portion or anyportion thereof of the IP right. Further, there may be infringers of theresidual portion of the IP right. It may be possible to obtainreasonable royalties based on the infringing use by the infringers.

However, target entity 120 may not possess the resources or knowledgerequired to capture the potential income that may be generated based onthe residual portion of the IP right. For example, patent litigation isa costly venture and a relatively small target entity may not have theresources to pursue this course of action, especially against an entitythat is not a competitor. Further, licensing revenue can only begenerated if the target entity 120 is able to identify potentiallicensees. Identifying potential licensees may require in depth analysisof IP rights and markets where the IP rights may be of value. This typeof analysis may require a diverse and specialized knowledge base.

Accordingly, target entity 120 may enter into a transaction whereintarget entity 120 is able to continue to utilize the first portion ofthe IP right and also capture the additional income potential of theresidual portion of the IP right. The transaction may include the saleof IP assets from the target entity 120 to patent investment entity 110,and the subsequent transfer of just the first portion of the IP rightsback from patent investment entity 110 to the target entity 120.

In order to begin the process, at least one IP asset must be identified.Generally, an owner that wishes to securitize some portion of its IPportfolio will identify all IP assets it owns, and determine which onesit wishes to have analyzed for securitization and/or monetization.Often, the owner will want to securitize all the IP assets it owns thatrelate to a particular product line or business activity. The IPportfolio may even contain IP assets owned by third parties, so long asthe owner seeking securitization and/or monetization has exclusiverights in such third party IP assets, and the right to convey suchexclusive rights to others.

Once a particular IP portfolio is identified, its current value must bedetermined to an acceptable degree of accuracy for purposes ofsecuritization and/or monetization, further described below. The numberof different approaches to determining value of the IP estate isvirtually limitless, and different methods will produce differentestimated values. One method, described below, is described in U.S.patent application Ser. No. 20010042034, filed Jan. 11, 2001.

To effectively securitize and/or monetize an IP asset, an economicallyreasonable estimate of the current value of the IP must be obtained asdescribed above. Further, the ability to demonstrate to a current ownerthe value of an IP for which the owner is seeking securitization isuseful. While numerous methods of estimating the value of one or moreintellectual properties are known, the invention disclosed hereinincludes a method of combining an estimate of the value of an IP with anassessment of the impact on the value of the selling business ofsecuritizing and/or monetizing that IP. This method comprises enteringinformation related to at least one IP, calculating a value of the atleast one IP using a first valuation algorithm, selecting a secondvaluation algorithm having a plurality of inputs, inputting the value ofat least one IP into the second valuation algorithm, inputting at leastone additional piece of information required by the second valuationalgorithm, and calculating the change in value to the owner of the IPusing the second valuation algorithm. The method may further compriseinputting an identifier indicative of a utility of the IP by selectingfrom a list including such options as: “new product category,”“improvement on an existing product,” “a new process,” “an improvementon an existing process,” and “regulatory compliance.” The method mayfurther comprise selecting a first valuation algorithm from a pluralityof valuation algorithms by selecting a first valuation algorithmparticular to the type of utility associated with the IP. The method mayfurther comprise entering information on the financial characteristicsof the owner not directly related to the IP asset.

Typical information used for the valuation method of this inventionincludes, but is not limited to: current and projected future revenuesand costs of the goods covered by the IP asset, cost savingsattributable to an invention covered by an IP asset, the book value ofthe business activities associated with the IP asset, and ongoingexpenditures for marketing, research and development. It is difficult tocalculate a value for an IP asset not associated with any current orongoing revenue or costs.

The particular valuation algorithm will necessarily determine whatinformation must be obtained and entered for the valuation to becompleted. For example, when making a valuation for an environmentalcontrol invention that permits a business to continue operation underregulatory requirements, the evaluation should take into considerationthe ongoing revenue generated by the continuation of the business. Inaddition to financial information, information such as the remaininglife of the patent may be used by the first valuation algorithm.

Once the appropriate first valuation algorithm has been determined foreach IP asset within a portfolio, the current value of the portfolio isdetermined using the appropriate algorithms.

Determining whether an owner should securitize or monetize its selectedIP portfolio, or a portion thereof, will depend on a number of factorsin addition to the estimated value of the IP portfolio. Therefore, thesecond valuation algorithm may have at least one other input in additionto the valuation of the IP portfolio obtained from the first algorithm.For example, an owner typically will not securitize or monetize its IPportfolio if the original owner is required to make a future paymentstream to a third party that is greater than the owner's return onequity or the monetization would result in a loss. Therefore, inaddition to determining the current value of the IP portfolio, thechange in value to the original owner of the IP portfolio may beconsidered when selecting a second valuation algorithm.

The current value of the IP portfolio may be used as a starting point todetermine the value at which the portfolio is securitized. Therefore,the estimated current value is used by a second valuation algorithm.

Once the appropriate second valuation algorithm is selected, theappropriate information is collected and entered. For example,securitization or monetization may involve an exchange of the IPportfolio for compensation, such as a lump sum payment, a stream ofincome, a contractual right, an equity interest, etc., to the originalowner. The future value to the original owner of the net proceeds of thecompensation may also be considered in the second valuation algorithm.One measure of the future value of the net proceeds of the compensationto the original owner is the current return on equity. Other measures,such as money market rates or the prime rate, may also be used.

The second valuation algorithm may determine the change in value to theoriginal owner if the IP portfolio is securitized and/or monetized,versus the value to the original owner if the portfolio is notsecuritized and/or monetized. This outcome will be used to decidewhether to securitize or monetize the IP portfolio. If the value ispositive, the business will show an increase in value in that amount ifthe IP portfolio is securitized and/or monetized. Once a positive changein the value of the business based on this calculation has beendetermined, the IP portfolio will probably be securitized and/ormonetized for an amount related to, but not identical to, the estimatedcurrent value. For example, if the estimated current value is$370,180,000, the portfolio may be securitized on monetized for$350,000,000, $370,000,000, or other amounts in a similar or lesserrange, but would probably not be securitized and/or monetized for anamount of $500,000,000.

The valuation is utilized in the acquisition of the IP assets by patentinvestment entity 110. Patent investment entity 110 may be any type ofentity, such as a corporation, a partnership, etc. Patent investmententity 110 is configured to acquire IP assets from target entity 120.Patent investment entity 110 may further be configured such that equityinterests in patent investment entity 110 may be issued. The equityinterests may be based, at least in part, on the income generated bypatent investment entity 110 in the securitization and/or monetizationof the acquired IP assets acquired by patent investment entity 110.Although generation of income is described, a loss may occur within thegeneration of income.

According to an exemplary embodiment, as shown in FIG. 1, IP assets maybe acquired by patent investment entity 110 from target entity 120 inexchange for some type of compensation, such as cash payments,contractual rights, equity interests in patent investment entity 110,etc. According to an exemplary embodiment, the acquisition of an IPasset by patent investment entity 110 from target entity 120 may beassociated with a cash payment from patent investment entity 110 totarget entity 120 based on the fair market value of the first portion ofthe IP right and an equity interest payment based on a percentage of thefair market value of the residual portion of the IP right. Thepercentage of the fair market value for the residual portion of the IPright may be a negotiated value determined to compensate target entity110 for providing the residual portion of the IP right.

In some embodiments, the target entity 120 makes representations andwarranties regarding the contributed IP. For example, the target entitymay represent that full disclosure regarding the IP has occurred. In oneembodiment, the target entity 120 will disclose if the Contributed IP isor has been subject to any interference, cancellation or other protestproceeding or any other challenge to its validity or the patentabilityof the art reflected therein, in the United States or otherwise, orwhether or not such proceedings have, to the best knowledge of targetentity 120, been threatened. In some embodiments, the target entity 120represents and warrants that it is the sole owner of the Contributed IP.This may include terms that each inventor of the inventions covered bythe Contributed IP, other than the target entity 120, has assigned alltheir right, title and interest in the Contributed IP to the targetentity 120 by a valid and enforceable assignment. In some embodimentsthe target entity 120 might also warrant that no other person has alien, encumbrance or other interest in any of the patents or other IPother than the holders of existing licenses. The existing licenses, ifany exist, may be specified in an exhibit attached to the relevantagreement. The target entity 120 may also agree to provide certifiedcopies of recorded assignments of the Contributed IP.

The target entity 120 may agree to disclose any known or potentialinfringement of any Contributed IP by any third party to the bestknowledge of the target entity 120. Another possible provision(s) is forthe target entity 120 to warrant and represent that: the Contributed IPhas been validly issued by the Commissioner of Patents and Trademarks ofthe United States or by similar authority in the jurisdiction ofissuance; each inventor of the inventions covered by the Contributed IPwas properly named as an inventor, and no other persons were so named;all fees, maintenance fees and filings required to be submitted to theUnited States Patent and Trademark Office (the “USPTO”) or similaroffice outside the United States have been made and all administrativeobligations thereto have been satisfied. The target entity 120 may alsowarrant that it currently uses or plans to use some or all of thetechnology rights or other IP contained within the Contributed IP.

Following the transfer of ownership of the IP assets to patentinvestment entity 110, patent investment entity 110 may lease the firstportion of the IP right back to target entity 110 such that targetentity 110 may continue to exercise the right afforded by the firstportion. Generally, the lease will allow target entity 110 to exercisethe IP right for the duration of a lease term associated with the lease.In order to qualify as a true lease, the lease may be structured suchthat the value of the first portion of the IP right at the end of thelease term is at least 20% of the economic value of the first portion ofthe IP right at the beginning of lease term. One way to accomplish thisis to limit the duration of the lease term to no more than eightypercent of the remaining economic life of the IP asset at the beginningof the lease.

In addition, wherein the patent investment entity 110 owns secondportions from at least one additional IP asset, as will be furtherdescribed below, patent investment entity may lease a right based onsome or all of the second portions from the at least one additional IPasset, as well as the second portion for the IP asset obtained from theseller.

According to alternative embodiments, the acquisition of the IP assetsby patent investment entity 110 from target entity 120 may be structuredaccording to any other method that results in the acquisition of the IPasset by patent entity 120. For example, as shown in FIG. 2, transfer ofthe IP asset can include the transfer of equity in patent investmententity 110 to a fund entity 130 through target entity 120.Advantageously, different structures and/or entities may be utilized tofacilitate financing, tax treatment, debt structure, distribution ofincome, etc.

According to an exemplary embodiment, patent investment entity 110 maysecuritize or monetize the IP asset. Securitization and/or monetizationmay include: selling of equity interests in the patent investment entity110; utilizing acquired IP assets to generate a stream of income, forexample through licensing, royalties, litigation, etc.; and allocatingpayments from the income stream to more than one investor, in varyingproportions dependent on the investors equity interest.

The method of allocating payments to each one of multiple investorsincludes the steps of: (a) creating and identifying investor accounts,(b) obtaining an initial amount from an investor in exchange for anassignable agreement to allocate a proportionate amount of future incometo the investors, (c) associating the initial amount from an investorwith that investor's account, (d) for each IP asset to be securitized,identifying the initial owner of the IP asset, (e) paying an amount tothe initial owner of the IP asset upon the transfer of title to the IPasset from the initial owner to one or more subsequent owners, (f)leasing a license to the initial owner and/or other entities for the useof the invention covered by the IP asset from the subsequent owner(s) inexchange for an agreement by the initial owner and/or other entity tomake at least one payment in a predetermined amount at a specified timefor the grant of such license, wherein the licenses can be of varyingscope as to rights granted or fields of use, (g) obtaining at least onelease payment from the licensee(s) of the IP asset, (h) placing the atleast one lease payment into fund 130 established for the purpose ofreceiving such funds, and (i) allocating the at least one lease paymentfrom fund 130 to the respective investor account(s) in correctproportions.

The method may also be applied in the situation where a particular IPasset is already licensed to a user other than the owner prior tosecuritization of the IP asset. In such case, the IP asset may beacquired from the current owner, subject to the existing licenseobligation, so long as the existing license is consistent with themethod disclosed herein. Alternatively, the method described herein maybe applied independently of such license, so long as the license back tothe initial owner is broad enough to encompass the existing license.Thus, the method would not be directly applicable in the situation wherean IP asset owner had granted an exclusive license of all the rightsgranted by the IP asset unless the licensee also participated and agreedto enter a new license in accordance with the method disclosed herein.

Although the method can be applied in the situation where there is onlyone investor, a more typical situation will involve multiple investors.In that situation, each investor has a separate account and canseparately sell their interest, or a portion thereof, to subsequentinvestors or redeem their interest or a portion thereof for cashpayments. Therefore, the system must be able to create and trackmultiple investor accounts.

To permit the management of a portfolio of securitized patents with theability to include new investors and permit existing investors totransfer or withdraw their interests, a computer system may benecessary. The system must be capable of handling multiple IPportfolios, multiple investor accounts, and the numerous transactionswhereby investor interests in the various IP portfolios are made,changed, or terminated. Additionally, the system must be capable ofhandling repeated securitization and/or monetization of multiple IPassets and facilitate investments that are not time-dependent upon orspecifically tied to individual underlying securitizing and/ormonetization transactions.

Specifically, a system which permits the collection of investments frommultiple investors, the real-time continuous evaluation of the value ofthe underlying IP assets, and which permits individual investors toincrease their investment or to withdraw invested funds withoutrequiring the underlying transaction to occur simultaneously with suchchange in investment is desirable for the ready securitization of IPassets.

Such a system may have the following general attributes, not all ofwhich are essential: it would involve more than one underlying IP assetsecuritizing or monetizing transaction; it would permit one or moreinvestors to invest funds in the system, where such investment was notassociated with any particular IP asset securitizing or monetizingtransaction; it would include the availability of funds not invested inIP assets for cash withdrawal, if needed; it would permit thesecuritizing and/or monetizing of additional IP assets using existinginvestment funds, rather than requiring additional investment for thenew IP to be securitized and/or monetized; it would permit eachindividual investor's current investment to be evaluated on a regularbasis; and would permit individual investors to withdraw fundsindependent of securitizing or monetizing transactions.

The computer system may be further configured to manage and/or implementthe functionality described herein as being performed by patentinvestment entity 110. For example, the system may include an incomedistribution system configured to manage the distribution of incomegenerated by the residual rights.

Referring now to FIG. 3, a block diagram illustrates entity involved inthe creation of a grouping of IP rights. The grouping may involve thecontribution of IP rights from one or more entities.

For example, FIG. 3 shows the a first patent investment entity 300contributing a first residual right 302 and a second residual right 304to a grouping 320. One or more entities may contribute IP rights togrouping 320. Second patent investment entity 310 contributes a thirdresidual right 312 to grouping 320. Each patent grouping may beassociated with a specific strategic out-licensing partner 330, asfurther described below.

The residual portion of IP rights obtained from target entity 120, shownin FIG. 1, may further be grouped with other residual portions acquiredfrom the acquisition of other IP assets. According to an exemplaryembodiment, grouping may include acquiring multiple residual portions ofan IP right within a single patent investment entity 110. The groupingmay further rights contributed from other sources, such as a targetentity 120.

Advantageously, the grouping of residual portions of IP rights 320allows the patent investment entity 110 to create value from of theresidual portions that would otherwise be wasted. The residual portionsmay be acquired based on at least one common characteristic of theresidual portions. The common characteristic may include a technologyarea, a typical usage, a specific industry, etc.

Grouping of patent rights may facilitate economies of scale in theexercise of patent rights. For example, patent investment entity 110 isspecifically configured for the exercise of patent rights. Accordingly,the patent investment entity 110 may have greater resources and/or moreexperience to obtain income based on the residual rights. Income may beobtained in the identification of potential licensees, pursuit oflitigation against infringers, etc.

Additionally, the grouping 320 may be further structured such that anyentity that provided an IP asset used in the grouping may be entitled toavoid infringement when practicing according to any other IP asset inthe grouping. This benefit may be provided through licenses, covenantsnot to sue, etc.

For example, multiple residual portions may be grouped related to asingle technology to strengthen a licensing bargaining position of thepatent investment entity 110. When approaching a potential licensee, itmay be advantageous be able to offer licenses to multiple residualportions within the potential licensee's field of operations.Advantageously, obtaining a single license has the effect ofstreamlining infringement avoidance for the potential licensee.

Grouping residual portions of IP rights may further facilitaterecognition of additional opportunities to obtain IP assets. Forexample, it may be possible to identify a new IP asset based on thegrouping of the residual portions and to obtain the IP asset based onthe identification. For example, where the claims of two patents, viewedin concert, define a gap and identify a novel concept, a new patentapplication, or bridge patent, may be filed based on the novel concept.

Further each group may be associated with strategic out-licensingpartner 330. Each strategic out licensing partner 330 may bespecifically experienced in the area of technology or focus of the groupof residual portions. Advantageously, the strategic out-licensingpartners 330 may be experienced in the industry and in IP to facilitateidentification of potential licensees, identification of bridge patentopportunities, etc.

Conditional language, such as, among others, “can,” “could,” “might,” or“may,” unless specifically stated otherwise, or otherwise understoodwithin the context as used, is generally intended to convey that certainembodiments include, while other embodiments do not include, certainfeatures, elements and/or steps. Thus, such conditional language is notgenerally intended to imply that features, elements and/or steps are inany way required for one or more embodiments or that one or moreembodiments necessarily include logic for deciding, with or without userinput or prompting, whether these features, elements and/or steps areincluded or are to be performed in any particular embodiment.

Any process descriptions, elements, or blocks in the flow diagramsdescribed herein and/or depicted in the attached figures should beunderstood as potentially representing modules, segments, or portions ofcode which include one or more executable instructions for implementingspecific logical functions or steps in the process. Alternateimplementations are included within the scope of the embodimentsdescribed herein in which elements or functions may be deleted, executedout of order from that shown or discussed, including substantiallyconcurrently or in reverse order, depending on the functionalityinvolved, as would be understood by those skilled in the art.

Unless indicated otherwise, it may be assumed that the process stepsdescribed herein are implemented within software modules (computerprograms) that are executed by one or more general purpose computers,and that these steps are performed automatically (i.e., without humanintervention). The software modules may be stored on or within anysuitable computer storage device. It should be understood that thevarious steps may alternatively be implemented in-whole or in-partwithin specially designed hardware.

As used herein, the word “module” refers to logic embodied in hardwareor firmware, or to a collection of software instructions, possiblyhaving entry and exit points, written in a programming language, suchas, for example C++. A software module may be compiled and linked intoan executable program, installed in a dynamic link library, or may bewritten in an interpretive language such as BASIC. It will beappreciated that software modules may be callable from other modules orfrom themselves, and/or may be invoked in response to detected events orinterrupts. Software instructions may be embedded in firmware, such asan EPROM or EEPROM. It will be further appreciated that hardware modulesmay be comprised of connected logic units, such as gates and flip-flops,and/or may be comprised of programmable units, such as programmable gatearrays or processors. The modules described herein are preferablyimplemented as software modules, but may be represented in hardware orfirmware.

It is contemplated that the modules may be integrated into a fewernumber of modules. One module may also be separated into multiplemodules. The described modules may be implemented as hardware, software,firmware or any combination thereof. Additionally, the described modulesmay reside at different locations connected through a wired or wirelessnetwork, or the Internet.

The disclosed features may be implemented in various environments,including computer-based environments, such as personal computers,workstations, servers, laptops, personal digital assistants (PDAs),mobile phones, handheld devices, and other computing devices,workstation, networked and other computing-based environments with oneor more customers. The present invention, however, is not limited tosuch examples and embodiments of the invention may be implemented withother platforms and in other environments.

By way of example, some embodiments of the invention may be implementedusing conventional personal computers (PCs), desktops, hand-helddevices, multiprocessor computers, pen computers, microprocessor-basedor programmable customer electronics devices, minicomputers, mainframecomputers, personal mobile computing devices, mobile phones, portable orstationary personal computers, palmtop computers or the like.

The storage media referred to herein symbolize elements that temporarilyor permanently store data and instructions. Although storage functionsmay be provided as part of a computer, memory functions can also beimplemented in a network, processors (e.g., cache, register), orelsewhere. Various types of storage mediums can be used to implementfeatures of the invention, such as a read-only memory (ROM), a randomaccess memory (RAM), or a memory with other access options. Further,memory functions may be physically implemented by computer-readablemedia, such as, for example: (a) magnetic media, like a hard disk, afloppy disk, a magnetic disk, a tape, or a cassette tape; (b) opticalmedia, like an optical disk (e.g., a CD-ROM), or a digital versatiledisk (DVD); (c) semiconductor media, like DRAM, SRAM, EPROM, EEPROM,memory stick, and/or by any other media, like paper.

Some embodiments of the invention may also include computer programproducts that are stored in a computer-readable medium or transmittedusing a carrier, such as an electronic carrier signal communicatedacross a network between computers or other devices. In addition totransmitting carrier signals, network environments may be provided tolink or connect components in the disclosed systems. Networkingenvironments are commonplace in offices, enterprise-wide computernetworks, intranets and the Internet (i.e., the World Wide Web). Thenetwork may be a wired or a wireless network. To name a few networkimplementations, the network may be, for example, a local area network(LAN), a wide area network (WAN), a public switched telephone network(PSTN), an Integrated Services Digital Network (ISDN), an infrared (IR)link, a radio link, such as a Universal Mobile Telecommunications System(UMTS), Global System for Mobile Communication (GSM), Code DivisionMultiple Access (CDMA), or a satellite link.

Having thus described the present invention by reference to certain ofits preferred embodiments, it is noted that the embodiments disclosedare illustrative rather than limiting in nature and that a wide range ofvariations, modifications, changes, and substitutions are contemplatedin the foregoing disclosure and, in some instances, some features of thepresent invention may be employed without a corresponding use of theother features. Many such variations and modifications may be consideredobvious and desirable by those skilled in the art based upon a review ofthe foregoing description of preferred embodiments. Accordingly, it isappropriate that the appended claims be construed broadly and in amanner consistent with the scope of the invention.

1-24. (canceled)
 25. A system for intellectual property asset liquiditygeneration through a patent investment entity, the system comprising: anacquisition engine to electronically communicate with a computerdatabase, the acquisition engine configured to store in the computerdatabase data relating to a first intellectual property asset acquiredfrom a seller on behalf of the patent investment entity; a trackingcontroller for controlling a division of rights in the firstintellectual property asset into a first portion and a second portion,the first portion comprising less than all of the rights in the firstintellectual property asset that are being utilized by the seller, thesecond portion comprising the remaining rights reflecting residualrights in the first intellectual property asset that are not beingutilized by the seller, the tracking controller configured to store inthe computer database data for tracking the first portion and the secondportion; an output engine for maintaining control, on behalf of theseller, of the first portion of the first intellectual property asset;and an equity distribution engine for granting ownership rights in thepatent investment entity to one or more employees of the patentinvestment entity to incentivize the one or more employees to maximize avalue of the second portion of the first intellectual property asset,wherein maximizing the value of the second portion comprises at leastlicensing the second portion to a licensing entity to generate liquidityof the first intellectual property asset for the patent investmententity, wherein the licensing entity is different than the patentinvestment entity and the seller; wherein the system comprises one ormore computer systems comprising a computer processor and an electronicstorage medium.
 26. The system of claim 25, wherein the ownership rightsin the patent investment entity includes options or shares of equity inthe patent investment entity.
 27. The system of claim 25, wherein theownership rights include at least one of a preferred membershipinterest, a common interest, and a lender interest.
 28. The system ofclaim 25, wherein the one or more employees are incentivized to maximizethe value of the second portion of the first intellectual property assetbased on at least a portion of the generated liquidity of the firstintellectual property asset contributing to an equity value associatedwith the ownership rights in the patent investment entity.
 29. Thesystem of claim 25, wherein maximizing the value of the second portioncomprises identifying a suspected infringing use by an infringing entityand outputting a determined reasonable royalty from the infringingentity in exchange for a covenant not to sue.
 30. The system of claim25, wherein maintaining control, on behalf of the seller, of the firstportion of the first intellectual property asset further comprisesgenerating a grant back license, on behalf of the patent investmententity, of the first portion to the seller in exchange for a stream ofpayments.
 31. The system of claim 30, wherein the first portion ofrights in the first intellectual property asset relate to a field ofuse, and wherein the grant back license licenses to the seller at leasta portion of the first portion of rights in the field of use.
 32. Thesystem of claim 30, wherein the grant back license entitles the sellerto mitigate infringement related to the second portion of the firstintellectual property asset.
 33. The system of claim 25, wherein theresidual rights may include one or more residual portions delineated bya field of use, a term of use, or a geographic location of use.
 34. Thesystem of claim 25, wherein the first intellectual property asset isacquired from the seller on behalf of the patent investment entity inexchange for an ownership interest in the patent investment entity. 35.A computer-implemented method for intellectual property asset liquiditygeneration through a patent investment entity, the computer-implementedmethod comprising: under control of a hardware computing deviceconfigured with specific computer-executable instructions:electronically storing, in a computer database, data relating to a firstintellectual property asset acquired from a seller on behalf of thepatent investment entity; controlling a division of rights in the firstintellectual property asset into a first portion and a second portion,the first portion comprising less than all of the rights in the firstintellectual property asset that are being utilized by the seller, thesecond portion comprising the remaining rights reflecting residualrights in the first intellectual property asset that are not beingutilized by the seller; electronically storing, in the computerdatabase, data for tracking the first portion and the second portion;maintaining control, on behalf of the seller, of the first portion ofthe first intellectual property asset; and granting ownership rights inthe patent investment entity to one or more employees of the patentinvestment entity to incentivize the one or more employees to maximize avalue of the second portion of the first intellectual property asset,wherein maximizing the value of the second portion comprises at leastlicensing the second portion to a licensing entity to generate liquidityof the first intellectual property asset for the patent investmententity, wherein the licensing entity is different than the patentinvestment entity and the seller.
 36. The computer-implemented method ofclaim 35, wherein the ownership rights in the patent investment entityincludes options or shares of equity in the patent investment entity.37. The computer-implemented method of claim 35, wherein the ownershiprights include at least one of a preferred membership interest, a commoninterest, and a lender interest.
 38. The computer-implemented method ofclaim 35, wherein the one or more employees are incentivized to maximizethe value of the second portion of the first intellectual property assetbased on at least a portion of the generated liquidity of the firstintellectual property asset contributing to an equity value associatedwith the ownership rights in the patent investment entity.
 39. Thecomputer-implemented method of claim 35, wherein maximizing the value ofthe second portion comprises identifying a suspected infringing use byan infringing entity and outputting a determined reasonable royalty fromthe infringing entity in exchange for a covenant not to sue.
 40. Thecomputer-implemented method of claim 35, wherein maintaining control, onbehalf of the seller, of the first portion of the first intellectualproperty asset further comprises generating a grant back license, onbehalf of the patent investment entity, of the first portion to theseller in exchange for a stream of payments.
 41. Thecomputer-implemented method of claim 40, wherein the first portion ofrights in the first intellectual property asset relate to a field ofuse, and wherein the grant back license licenses to the seller at leasta part of the first portion of rights in the field of use.
 42. Thecomputer-implemented method of claim 40, wherein the grant back licenseentitles the seller to mitigate infringement related to the secondportion of the first intellectual property asset.
 43. Thecomputer-implemented method of claim 35, wherein the residual rights mayinclude one or more residual portions delineated by a field of use, aterm of use, or a geographic location of use.
 44. Thecomputer-implemented method of claim 35, wherein the first intellectualproperty asset is acquired from the seller on behalf of the patentinvestment entity in exchange for an ownership interest in the patentinvestment entity.